Bangladesh Biman set to become public limited company
Apr 26, 2007 - 1:28:39 PM
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In the second phase, the financial balance sheet would be restructured and shares offloaded through an initial public offering. The huge liabilities of the corporation - 7 billion takas - - could be transferred to a block account for attracting FDI, Bhattacharya said.
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By IANS,
[RxPG] Dhaka, April 26 - Bangladesh Biman, the national carrier and the country's only airline, is set to become a public limited company under a revamp plan aimed at reducing its huge losses and operational costs.
A golden handshake is likely to be offered to half of the airline's 6,838 employees under a plan cleared by the government Wednesday.
'The government is thinking about making the national airlines profitable by turning it into a public limited company. But the government will own 100 percent shares,' said communications and civil aviation adviser M.A. Matin.
Set up in 1972, Biman has been gasping for funds to buy new aircraft and equipment and also for its operational cost expenditure. The Khaleda Zia government had last year refused funds and asked it to raise money from the market.
Biman, which has 15 aircraft for domestic and international operations, was hit hard last year when it was restricted from flying to the US and Canada on grounds of air safety, reported The Daily Star.
A high-powered committee, headed by the secretary of the civil aviation ministry, recommended transforming the corporation into a public limited commercial company. The report of the committee was placed before a consultation meeting of the adviser with civil society members at the civil aviation ministry.
After the meeting, Matin told reporters that he would place the committee's recommendations at the advisory council meeting for final approval. 'I shall recommend making Biman a limited company by June.'
Admitting that the restructuring plan would cut the existing manpower into half, Matin said the government would formulate guidelines for releasing corrupt and extra manpower through a golden handshake.
Biman incurs a loss of 40 billion to 50 billion takas - annually only due to corruption, said Abul Barakat, an economics teacher at Dhaka University and a member of the committee.
'If we can stop the corruption, Biman can earn an annual profit of 20 billion takas -,' he said.
Another committee member, Debapriya Bhattacharya, who is also the executive director of the Centre for Policy Dialogue, suggested that the government undertake the restructuring plan in two phases.
In the first phase, the government should formulate documents for turning the corporation into a public limited company and prepare to invite foreign direct investment - and strategic partners, he said.
In the second phase, the financial balance sheet would be restructured and shares offloaded through an initial public offering. The huge liabilities of the corporation - 7 billion takas - - could be transferred to a block account for attracting FDI, Bhattacharya said.
He said the government should also reschedule existing routes while continuing commercially viable routes like Middle East and Malaysia.
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